- Cuts of up to 25% in government departments on the cards News Desk
The Prime Minister of the coalition government David Cameron will today set out his vision on how critical it is to make cuts to the levels of public spending and it is expected he will say that, “the decisions we make will affect every single person in our country. And the effects of those decisions will stay with us for years.
In what is being described as the most "downbeat" prediction of any post-war Prime Minister David Cameron will in a speech in Milton Keynes this morning outline how he will declare that Britain's public finances are worse than expected and are forcing him to take "momentous decisions".
“It is precisely because these decisions are so momentous … I want to make sure we go about the urgent task of cutting our deficit in a way that is open, responsible and fair.”
He will also warn that the problem of the deficit is worse than he feared, because Labour’s growth projections appear too optimistic. Independent estimates about the level of spending cuts that are needed in Britain suggest further parallels with Canada.
The Institute of Fiscal Studies said last month that cuts as high as 25 per cent for each Whitehall department would be needed by 2015.
On Tuesday the Chancellor of the Exchequer George Osborne will use Canada as an example of how the UK can recover from the "economic crisis" with a programme of "deep and hard cuts" to public spending by setting out the first steps towards what Nick Clegg described last year as "savage" spending cuts when he outlines a framework for an autumn spending review that will introduce department-by-department cost savings.
The Canadian plans involve a "star chamber" in which members of the cabinet will be forced to justify their budgets in front of a group of ministerial and civil service heavyweights.
This follows the example of the former Liberal Canadian prime minister Jean Chrétien, who turned a fiscal deficit of 9.1% of GDP in the mid-1990s into a surplus by slashing federal budgets by 20%. Under his "nothing off the table" approach, ministers had to justify their budgets in front of colleagues.
Danny Blanchflower, who served on the Monetary Policy Committee of the Bank of England said last month:
"Either there will be few savings or there will be savings from firing people, self-employed consultants are going to be hard hit. A hiring freeze will hit the young very hard at a time when youth unemployment remains high. A pay freeze in the public sector will lower demand further and inevitably lower growth."
Blanchflower has said that the "multiplier effect" of the cuts will push the British economy into a "double-dip" recession and said:
"The size of the cuts are not trivial, as some have claimed, because of the scale of the multiplier effects involved. They will harm workers in the public sector and the private sector and lower incomes and profits."
N. Korea prepares for power transferDramatic changes in North Korean leadership this week appear to be paving the way for an eventual transfer of power from leader Kim Jong Il to his youngest son, analysts say.
